Presentation on Nigerian Film Industry at the World Intellectual Property Organization (WIPO). Delivered in Geneva, 2009.

1. FILM FINANCING IN NIGERIA:
OPPORTUNITIES AND
CHALLENGES
prepared for the
INFORMATION MEETING ON INTELLECTUAL PROPERTY FINANCING
organized by
the World Intellectual Property Organization (WIPO)
Geneva, Switzerland
March 10, 2009
Dayo Ogunyemi
234 Media Partners
+234.803.390.9988
+1.917.309.8278
dayo.ogunyemi@gmail.com

2. FILM? IN AFRICA? WHY FILM FINANCE IS IMPORTANT
 Arguably, movies currently constitute Africa’s most valuable
intellectual property products;
 The movie industry, driven primarily by Nigeria’s Nollywood, is the
most active and valuable part of the internal knowledge economy
in Africa today;
 Movie industry growth vastly outpaces that of the publishing, music,
and software industries;
 It is therefore critical to Africa’s economic growth that its formal
financial sector is able to engage productively with the movie
industry.
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3. …MEET NOLLYWOOD, NIGERIA’S FILM INDUSTRY
 Nollywood is 3rd largest film industry in the world, after Hollywood and
Bollywood;
 In just over a decade and a half, Nollywood has grown from nothing to
annual revenues estimated in the $200 - $300 million range;
 Nollywood was developed by filmmakers adopting disruptive technologies –
digital filming and editing equipment. Innovation has paid off – while
global movie industry is looking to digital film as its future, Nollywood is
entirely based on it;
 Basic model is small-budget (typically under $150,000), quick turnaround
(typically shooting schedule between 20 and 30 days), high volume. In
recent years, growing attention to technical and aesthetic quality;
 Huge and growing global fan-base, with well-established star system for
talent;
 Inspiration for small-budget digital movie making elsewhere on the
continent – Riverwood (Kenya), Gollywood (Ghana).
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4. GLOBAL MOVIE INDUSTRY STRUCTURE
 The top three movie producing countries in the world by output
are:
 The United States - “Hollywood”
 India - “Bollywood”
 Nigeria - “Nollywood”
 Globally, the movie industry typically has three main revenue
prongs:
 Theatrical Exhibition
 Home Video
 Broadcast/Ancillary
 Of the three top movie industries, only Nollywood is wholly
dependent on home video, which is sold through a semi-formal
wholesale distribution network
 This structural difference have profound consequences for formal
third-party finance for film in Nigeria
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5. COMPARISON OF REVENUE SOURCES
Hollywood Bollywood Nollywood
Home Video
Home Video
as % of total
as % of total Ancillary
Theater as revs
revs (broadcast,
% of total 98%
50% etc.) as % of
total revs revs
17%
Home
Video as %
Theater as % Other of total Ancillary
Other Ancillary (broadcast,
of total revs 16% revs Theater as
4% (broadcast, etc.) as % of
17% % of total
etc.) as % of
revs total revs
total revs
2%
9% Other
0%
Hollywood Bollywood Nollywood
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6. HOLLYWOOD vs. NOLLYWOOD: INDUSTRY STRUCTURE
United States Nigeria
 “Major” dominated studio  No major studios built
system – large corporate around production
producers and distributors  Major distributors (known
like Universal, Sony as marketers) who operate
 Historically, active system a semi-formal wholesale
of independent producers network
 Well-defined revenue  Large numbers of
picture consisting of independent/individual
domestic and international filmmakers
exhibition, home video,  Revenue picture almost
pay TV, free-to-air entirely dependent on
broadcast windows domestic home video sales

7. HOLLYWOOD vs. NOLLYWOOD: FILM FINANCING
United States Nigeria
 Major studios initiated and  Marketer (distributor) initiated
financed and financed
 Independent productions:  Independent producers:
 Equity financing  Pick-up (Marketer buys
 Pre-sales completed movie in its entirety)
 Production loans (non-recourse,  Equity financing (self, friends &
IP and contracts as collateral) family)
 Negative pick-up (major buys  Personal loans (recourse, IP not
some or all rights to completed accepted as contracts)
movie)
 Reducing risk:
 Completion Guarantee
 Errors & Omission Insurance

8. ELEMENTS FOR SUCCESSFUL FILM FINANCE
 Establish clear chain of title - adequate documentation of
permissions and ownership for all of the intellectual property rights
underlying a movie as well as key contractual relationships
 Efficacious registries for recording ownership and/or security
interests in the completed movie – equity investors and debt
providers need to be able to establish their claims to the economic
value that a movie represents, even though it is an intangible
asset.
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9. KEYS TO IMPROVING NOLLYWOOD’S ACCESS TO FINANCE
 Developing and formalizing multiple revenue streams
–exhibition, home video distribution, broadcast
 Establishing chain of title – documentation of ownership
and contractual rights
 Enabling the recording of security interests and
transfers of rights through registries linked to IP
ownership database
 Increasing industry awareness and understanding on the
part of financial institutions
 Introducing risk-reducing financial instruments
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